'iPad mini' build cost estimated to start at $200, may retail for $299

Posted:
in General Discussion edited May 2014
A preliminary breakdown of expected component and manufacturing costs finds that Apple is likely to spend $195 to $254 in building the various models of its rumored 7.85-inch iPad, and is projected to sell the tablets at lower-than-usual margin rates

Rendering Front/Back
iPad mini mockup. | Source: Martin Hajek




Analyst Ming-Chi Kuo of KGI Securities said in a research note to investors that the estimated bill of materials (BOM) plus manufacturing costs for Apple's iPad mini will range from $195 for the 16GB Wi-Fi model, to $254.50 for the top-of-the-line 64GB 4G LTE version. Comparing these numbers with allegedly leaked retail prices from the UK, Apple will be seeing gross profit margins of 35 percent to 58 percent, much lower than its other iDevice offerings.

The third-generation iPad, which is also considered a low profit margin product for Apple, grabs a 37 percent to 51 percent margin rate. In contrast, the iPhone 5 is estimated to bring in huge margins of 68 percent to 72 percent.

While mere speculation at this point, the iPad mini's aggressive pricing structure could stymie competitors' attempts to encroach on Apple's industry-leading mobile device marketshare. As noted in a report earlier on Saturday, rival manufacturers are taking advantage of an emerging market for 5- to 9-inch devices, a gap positioned directly between the iPhone and 9.7-inch iPad that Apple has yet to fill.

As for parts cost, Kuo sees the iPad mini's screen as being the single most expensive component at $56.50, which covers the display, touch sensor, cover glass and other hardware. The assembly is said to employ a new technology called GF DITO, or "GF2," allowing the device to be 18 percent thinner than the full-sized iPad.

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Coming in second is the total cost of the mini's logic board, which is estimated to cost $54 for the Wi-Fi only version and $80 for the 4G LTE-compatible model. As in the iPhone 5, Kuo expects Apple to use Qualcomm's MDM9615M baseband chip, a $24 item.

Also of note is the inclusion of what the analyst calls a "tweaked version" of Apple's A5X SoC that powers the third-generation iPad, though the mini's chip will be built using the 32nm process and will access 512MB of RAM. The original A5X was built on Samsung's 45nm architecture and leveraged 1GB of physical memory.

Rounding out the component checklist are the $33 casing, $16.50 5-megapixel rear-facing camera, $12 battery, and $7 in labor costs.

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Apple is widely expected to unveil the iPad mini at a special media event on Tuesday, with rumors suggesting the company may also debut a 13-inch MacBook Pro with Retina display.
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Comments

  • Reply 1 of 103
    So here's what confuses me about the talk of a $299 iPad mini -- Apple just released the new iPod touch, and the starting price -- $299. I can't see Apple pricing the iPad mini at the same starting point as the iPod touch. Consumers would be left with the choice between a $299 iPod or a $299 iPad? Hmmmmm... I'm guessing $349 for the start point, even at 16GB.
  • Reply 2 of 103
    herbapouherbapou Posts: 2,221member
    joeypk07 wrote: »
    So here's what confuses me about the talk of a $299 iPad mini -- Apple just released the new iPod touch, and the starting price -- $299. I can't see Apple pricing the iPad mini at the same starting point as the iPod touch. Consumers would be left with the choice between a $299 iPod or a $299 iPad? Hmmmmm... I'm guessing $349 for the start point, even at 16GB.

    Depends on the specs, dont forget that ipod touch has 32g. Imo to have any chance to sell in volume they need 249 to 299 on the low end.

    I don't see a problem with having the touch and the mini at the same price. If you need a small ipod touch they this is what you will buy. depends on the need.

    Imo estimating the cost of an un-announced product is speculation on top of speculation....

    There is a lack of hardware leaks for the mini compare to what we got for the iphone 5,, so they could really surprise us.

    I think the most important "spec" of the mini will be weight. You need to be able to hold it with one hand like an e-reader.
  • Reply 3 of 103
    solipsismxsolipsismx Posts: 19,566member
    joeypk07 wrote: »
    So here's what confuses me about the talk of a $299 iPad mini -- Apple just released the new iPod touch, and the starting price -- $299. I can't see Apple pricing the iPad mini at the same starting point as the iPod touch. Consumers would be left with the choice between a $299 iPod or a $299 iPad? Hmmmmm... I'm guessing $349 for the start point, even at 16GB.

    They aren't even in the same category. If you're in an Apple Store debating between a PMP and a tablet then you really have no idea what you want or why you want. And why would Apple care so long as you leave with one of their devices?
  • Reply 4 of 103
    Others are reporting an entry price of $329. I think that is about right with the iPd 2 discontinued.
  • Reply 5 of 103
    herbapouherbapou Posts: 2,221member
    Others are reporting an entry price of $329. I think that is about right with the iPd 2 discontinued.

    I saw that but it may be just a conversion of the german price leak. Seriously a list of prices is not hard to forge.
  • Reply 6 of 103
    solipsismxsolipsismx Posts: 19,566member
    Others are reporting an entry price of $329. I think that is about right with the iPd 2 discontinued.

    I don't expect to see the iPad 2 being discontinued because of a smaller tablet that is much cheaper. I would only expect the iPad 2 to be discontinued because it's not selling well to maintain it's production.
  • Reply 7 of 103
    This analyst is an idiot. Profit margins minus assembly, packaging and distribution drops those margins down considerably. I wish business majors were required to take some Engineering level Math courses. They wouldn't sound so ignorant.
  • Reply 8 of 103

    Quote:

    Originally Posted by SolipsismX View Post





    They aren't even in the same category. If you're in an Apple Store debating between a PMP and a tablet then you really have no idea what you want or why you want. And why would Apple care so long as you leave with one of their devices?


     


    Just repeating what Gruber said 2 days ago.


     


    http://daringfireball.net/2012/10/ipad_questions_and_answers

  • Reply 9 of 103

    Quote:

    Originally Posted by SolipsismX View Post





    I don't expect to see the iPad 2 being discontinued because of a smaller tablet that is much cheaper. I would only expect the iPad 2 to be discontinued because it's not selling well to maintain it's production.


     


    Definitely will be discontinued.  The iPad 2 is a placeholder for the smaller iPad.  And, as has been conjectured, the smaller iPad will run iPad 2 software unchanged - just on a smaller screen with the same pixel count.

  • Reply 10 of 103
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post




    They aren't even in the same category. If you're in an Apple Store debating between a PMP and a tablet then you really have no idea what you want or why you want. And why would Apple care so long as you leave with one of their devices?



    They are sort of in the same category, iOS category. The iPod Touch is really a lot more than a PMP, but I could see the price points being the same due to the miniaturization costs higher in the iPod Touch. Anyway it is only the entry model iPad mini that would be a conflict. Most people who purchase the iPod Touch want a lot more storage than 8 GB.

  • Reply 11 of 103
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    They are sort of in the same category, iOS category. The iPod Touch is really a lot more than a PMP, but I could see the price points being the same due to the miniaturization costs higher in the iPod Touch. Anyway it is only the entry model iPad mini that would be a conflict. Most people who purchase the iPod Touch want a lot more storage than 8 GB.

    It's still a pocketable device v. a non-pocketable device. To claim they are the same category marketed to the same customers for the same usage needs screams to me the short sided comments about the iPad "just being a large iPod Touch". It's not 29.6" sq. compared to the 6.83" sq for the new, larger iPod Touch display. They are very much different marketing categories.
  • Reply 12 of 103
    solipsismxsolipsismx Posts: 19,566member
    applegreen wrote: »
    Just repeating what Gruber said 2 days ago.

    http://daringfireball.net/2012/10/ipad_questions_and_answers

    Good article. What Gruber says makes a lot of sense.

    applegreen wrote: »
    Definitely will be discontinued.  The iPad 2 is a placeholder for the smaller iPad.  And, as has been conjectured, the smaller iPad will run iPad 2 software unchanged - just on a smaller screen with the same pixel count.

    If the iPad 2 falls off their site silently I will concede that is a possibility but if it stays and we see the older 10" iPads being sold the same way older iPhones and iPads are sold today then you have to admit that it's not just a placeholder for a smaller iPad.
  • Reply 13 of 103
    asdasdasdasd Posts: 5,293member
    They included the assembly costs in the labour costs. $7

    Look.

    1) there is no point competing at a price point of $349, entry. You might as well not bother.
    2) the iPod touch is a different device. The price of the touch does not matter a jot.
    3) I think the report is just giving a standard price set without taking volume discounts into account. On the other hand it is also giving the retail price. They don't get the retail price unless they sell in their own stores or online.

    That said Apple can forgo margins on the lower end and try and make consumers buy the higher end model by making the lower end model start with inadequate memory. 8G.

    Priced at $250 max. Nothing else is worthwhile given the iPad 2's low cost
  • Reply 14 of 103
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post




    Quote:

    Originally Posted by mstone View Post



    They are sort of in the same category, iOS category. The iPod Touch is really a lot more than a PMP, but I could see the price points being the same due to the miniaturization costs higher in the iPod Touch. Anyway it is only the entry model iPad mini that would be a conflict. Most people who purchase the iPod Touch want a lot more storage than 8 GB.




    It's still a pocketable device v. a non-pocketable device. To claim they are the same category marketed to the same customers for the same usage needs screams to me the short sided comments about the iPad "just being a large iPod Touch". It's not 29.6" sq. compared to the 6.83" sq for the new, larger iPod Touch display. They are very much different marketing categories.


    It is not that big of a deal. The iPod Touch really doesn't share many similarities with the rest of the iPod category. It is much more a part of the iOS family in my mind. The point is that the price being the same shouldn't be a problem since they are different enough. After all the top iPod Touch is already the exact same price as the iPad 2 and there is no conflict. Price overlap is a non issue.

  • Reply 15 of 103

    Quote:

    Originally Posted by SolipsismX View Post





    They aren't even in the same category. If you're in an Apple Store debating between a PMP and a tablet then you really have no idea what you want or why you want. And why would Apple care so long as you leave with one of their devices?


    Correct, of course. 


     


    Instead of these Apple products, think vehicles. SMART car, electric, hybrid, medium size car, mini-van, van, pickup truck, motorcycle, power boat. Certainly, there will be some price comparisons among these options to understand the function/price ratio, but someone who needs a pickup will not care a wit about the cost of the other vehicle types. 

  • Reply 16 of 103


    A 32nm A5X doesn't make much sense for the iPad Mini. A 32nm A5X would be about the same size as the A6 while the A6 has an equivalent speed GPU and a much faster CPU. The only advantage the A5X has is higher memory bandwidth and higher GPU fill rate which is unnecessary for the iPad Mini since it's only expected to run at 1024x768. If Apple wanted to go with an improved processor they're more likely to use the A6 than a 32nm A5X. The more likely SoC choice is just using the 32nm A5 from the iPad2,4.


     


    If there is going to be a 32nm A5X, it'll probably come in the rumoured Lightning connector iPad 2012 refresh.

  • Reply 17 of 103
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    It is not that big of a deal. The iPod Touch really doesn't share many similarities with the rest of the iPod category. It is much more a part of the iOS family in my mind. The point is that the price being the same shouldn't be a problem since they are different enough. After all the top iPod Touch is already the exact same price as the iPad 2 and there is no conflict. Price overlap is a non issue.

    I agree. It is interesting that the iPod Nano has been evolving into iOS in so many ways. I don't think it's been confirmed yet but the fact that the new Nano has round icons instead of rounded squares tells me it's still not iOS. At some point I think it will be, even if they don't want to create an App Store for it. It would be nice to have email, a browser and iTunes Match though with WiFi.

    If I were to compare this iPad "mini" to the Touch I'd say it's taking the same marketing position the Touch takes under the iPhone as it will take under the 10" iPad. I expect it to copy the same design cues as the new Touch. I would have also expected colors but that doesn't holding water with these latest price "leaks".
  • Reply 18 of 103
    solipsismxsolipsismx Posts: 19,566member
    A 32nm A5X doesn't make much sense for the iPad Mini. A 32nm A5X would be about the same size as the A6 while the A6 has an equivalent speed GPU and a much faster CPU. The only advantage the A5X has is higher memory bandwidth and higher GPU fill rate which is unnecessary for the iPad Mini since it's only expected to run at 1024x768. If Apple wanted to go with an improved processor they're more likely to use the A6 than a 32nm A5X. The more likely SoC choice is just using the 32nm A5 from the iPad2,4.

    If there is going to be a 32nm A5X, it'll probably come in the rumoured Lightning connector iPad 2012 refresh.

    I don't see why people would expect the 4 core GPU of the iPad (3) unless they also expect a 326 PPI 2048x1536 display, which is also unlikely. This was also common with the the 6th gen iPhone rumours. "The iPad (3) has an A5X so the next iPhone should too."
  • Reply 19 of 103

    Quote:

    Originally Posted by SolipsismX View Post





    Good article. What Gruber says makes a lot of sense.

    If the iPad 2 falls off their site silently I will concede that is a possibility but if it stays and we see the older 10" iPads being sold the same way older iPhones and iPads are sold today then you have to admit that it's not just a placeholder for a smaller iPad.


     


    The iPad 2 could slide over into the "Educational Only" category. I seem to remember that Apple management was very impressed with the continual interest in the iPad 2 at the lower price. We have no idea how strong the sales of the iPad 2 remains.

  • Reply 20 of 103
    solipsismxsolipsismx Posts: 19,566member
    The iPad 2 could slide over into the "Educational Only" category. I seem to remember that Apple management was very impressed with the continual interest in the iPad 2 at the lower price. We have no idea how strong the sales of the iPad 2 remains.

    If the main interest was educational then I think a somewhat smaller but significantly cheaper iPad could easily shift that balance.
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